Since 2016, Title III of the Jumpstart Our Business companies Act (the “JOBS Act”) and Regulation Crowdfunding have made it possible for most people to become early stage investors in private companies.
Based on your income or net worth you can make investments through recognized funding portals like Xorro, which complies with SEC regulations and is a member of FINRA. If you chose to invest in a company via the Xorro platform and the company performs well, the value of your investment may increase. However, risks include a complete loss of capital if the business struggles.
Federal regulations limit the amounts you can invest due to the inherent risks involved. Before proceeding, it’s essential to understand the risks associated with investing in private and early stage businesses. Familiarize yourself with the principles of early-stage investments. It is important to read this Information carefully, and we encourage all investors to explore additional resources as needed. You may also find useful investor information here.
In the last 10 years investment appetite has pivoted much more towards private markets with demand from retail (non-accredited) investors in particular continually and significantly increasing. In the past, early stage private investing was only accessible to high-net-worth individuals and institutions like private equity & venture capital investors.
Since 2016 platforms such as Xorro have been able to make these investment opportunities accessible to everyone. Now, you can invest directly in vetted early stage companies. Xorro is focussed on enabling entrepreneurs, specifically in the creator economy, to offer their loyal followers and fans these investment opportunities.
When you invest via Xorro, you’re not just backing a project; you’re taking a share in the journey of the creator entrepreneurs you follow and care about. Our mission at Xorro is to fuel creator entrepreneurs and engage super fans and followers like never before.
To get started on your investment journey:
1. Sign Up: Create your investor profile on Xorro.
2. Complete Verification: Finish identity and KYC verification as required by U.S. regulations.
3. Create or Connect a Digital Wallet
4. Fund your Wallet with Moonpay
5. Browse Opportunities: Explore available investment options and make your first investment.
Your ability to invest on Xorro is limited by federal regulations and your investor status. Regulation Crowdfunding and Regulation A/A+ set investment limits for non-accredited investors to mitigate the risks associated with speculative investments.
Your limits can be calculated automatically based on your income and net worth information provided by you during Xorro registration and KYC approval.
Regulation CF: For non-accredited investors, the investment limit in any 12-month period is based on your income and net worth. You may invest the greater of $2,500 or:
• If your income or net worth is under $124,000, 5% of the higher figure
• If both exceed $124,000, then 10% of the greater amount, capped at $124,000
Regulation A: Accredited investors can invest without limits, while non-accredited investors may invest up to 10% of their net worth or annual income, whichever is greater.
Conducting comprehensive due diligence is essential before making private investments. Consider the following:
• Understand Risks: Be aware that private investing carries significant risks, including the potential for complete loss.
• Invest in Familiar Opportunities: Choose investments you understand well and can clearly articulate.
• Evaluate the Team: Research the entrepreneur or creator behind the opportunities, assessing their past experience.
• Conduct Thorough Research: Familiarize yourself with deal terms, as well as the issuer's current status and growth plans.
• Engage with the Community: Utilize comment sections to gain additional insights directly from founders and other investors.
• Diversify Your Portfolio: Instead of making sizable investments in one venture, consider smaller investments across various opportunities.
• Assess the Lead Investor: Determine if a more experienced investor is backing the company and understand their rationale.
• Consider the Impact: Reflect on how your investment might influence future developments within sectors you're passionate about.
Investments on Xorro carry significant risks and are inherently speculative. For a comprehensive understanding of these risks, be sure to also review the full risk disclosures available in our terms and conditions of service. It’s crucial to conduct thorough research and understand the following key risks before making investment decisions:
Speculative Nature
Investments in early stage companies, early-stage ventures, emerging technology companies, and digital asset projects are speculative. The success of these entities often depends on the development of new products or services that may or may not find a market. Unlike established businesses, which typically have a track record of revenue and income, early stage companies may fail, leading to a total loss of your investment.
Valuation Challenges
There is typically no secondary market for securities sold under Regulation CF or Regulations D and S. Issuers fundraising through Xorro are often early-stage early stage companies and may lack substantial operating or financial histories. This results in limited information for properly valuing the offered securities. Consequently, there is a risk that the price you pay for securities may far exceed their actual value, impacting potential resale prices.
Limited Disclosure
While issuers are required to disclose certain information about their business, offering, and anticipated use of proceeds, early-stage companies may provide only limited data due to ongoing development. Depending on the method of offering, companies may not be obligated to file annual reports, including financial statements, which hinders transparency. For example:
• Regulation CF: Companies file a Form C for disclosures dictated by the SEC.
• Regulation A+: Companies file a Form 1-A, requiring SEC qualification before sales.
• Regulations D and S: Companies provide a Private Placement Memorandum (PPM) or other documents, but with fewer specific rules.
Illiquidity:
Your ability to resell investments during the first year will be restricted, with narrow exceptions. Unlike publicly traded companies, where securities can be quickly and easily traded, you may need to locate an interested private buyer to resell your crowdfunded investment, potentially resulting in long holding periods.
Cancellation Restrictions:
Under Regulation Crowdfunding, you can cancel your investment commitment for any reason up to 48 hours before the campaign deadline. Some campaigns may have multiple deadlines, known as rolling closes, so you should pay attention to notices from companies regarding these. Conversely, under Regulations A+, D, and S, investment commitments are generally binding, with little to no cancellation options available.
No Voting Rights:
Investment instruments on Xorro may not provide voting rights. While investors may receive voting rights if the instrument converts to stock, these rights are likely to be diluted when companies raise additional capital.
Investment in Personnel:
Investing in a startup, early-stage venture, or emerging technology company is also an investment in the founding entrepreneur(s) and/or management. Their ability to execute the business plan significantly affects the business's viability and success. Additionally, a portion of each investment may be allocated to fund salaries, which investors should review carefully when considering the use of proceeds.
Possibility of Fraud:
There is inherent risk that a company might engage in fraudulent activities. Once an offering concludes, investors have no control over the actions of the company, potentially leaving them vulnerable to fraudulent schemes.
Lack of Professional Guidance:
Many successful issuers attribute their achievements to guidance from professional early-stage investors, who often negotiate board seats and provide critical resources and industry connections. Companies primarily financed through crowdfunding may lack this level of support and mentorship, which can hinder their ability to navigate growth challenges effectively.
For a comprehensive understanding of these risks, be sure to review the full risk disclosures available in our terms and conditions of service.
Companies raising funds on Xorro define the terms under which they sell securities. Here’s what to know:
Offering Goals:
• Minimum Goal: The least amount needed to proceed with fundraising. If unmet, all investments are returned.
• Maximum Goal: The highest amount the company seeks. Once met, no further investments will be accepted.
Campaign Timeline:
Each fundraising campaign has a fixed timeline, including:
• Specific start and end dates.
• The potential for early closure or extension if the minimum goal is met.
Investment Amounts:
• Companies set minimum investment sizes
• Xorro allows contributions starting as low as $50, typically ranging from $100 to $250. Maximum investment amounts may also be capped.
Your Right to Know:
Companies or projects raising funds on Xorro are subject to varying disclosure requirements under different regulations: Reg CF, Reg A+, and Reg D. Here’s what you need to know:
Regulation Crowdfunding (Reg CF)
General Requirements:
Companies must disclose various information, including:
• General company information
• Officers and directors
• Business description
• Planned use of proceeds
• Funding goal and deadline
• Related-party transactions
• Specific risks
• Financial information
Financial Disclosure Based on Amount Raised:
• $124,000 or less: Financial statements and specific line items from tax returns, certified by the principal executive officer. Issuers raising up to $250,000 may rely on self-certification.
• $124,000.01 to $618,000: Financial statements reviewed by an independent accountant, along with the accountant’s review report and certifications.
• $618,000.01 to $5 million: First-time crowdfunding requires financial statements reviewed by an accountant; offerings over $1.235 million require audited financial statements with an accountant’s audit report.
Regulation A+
Offering Circular Requirements:
Companies must provide an offering circular containing important information such as:
• Investment risks
• Use of proceeds
• Existing shareholders' shares being offered
• Company business and management
• Performance and financial statements
Funding Tiers:
• Tier 1: Raise up to $20 million within 12 months; minimal ongoing reporting obligations (only an exit report).
• Tier 2: Raise up to $75 million within 12 months; requires ongoing reporting with audited financial statements.
Regulation D and S
Disclosure Practices:
While there are no specific federal disclosure requirements under Reg D and S, Xorro encourages issuers to provide disclosures similar to those required under Reg CF.
Updates Post-Closing :
After an offering closes, issuers may provide operational updates and financial statements on their websites annually. However, these updates may be less frequent and not as robust as those from public companies. Issuers can legally terminate these updates, so do not rely on them indefinitely. Xorro does not provide post-closing disclosures on its website.
Initial Resale Prohibition: You cannot resell your securities within the first 12 months post-campaign closing, except in specific circumstances:
• To the issuing company
• To accredited investors
• To immediate family members (nuclear family)
• Due to personal circumstances like death, divorce, etc.
• To a trust you control or one for a family member
• As part of a later SEC-registered offering
Post-12 Month Sale: After the initial 12 months, resale is allowed under U.S. federal law, but state or foreign laws may still apply. Consult an attorney before transferring private company securities.
Lack of Market: Most early stage companies are private companies, and their securities are not traded publicly. There’s no guarantee a market or buyer will be available, even after the 12-month period.
Definitions of Transfers: Transferring securities includes selling, gifting, or pledging—any method of transferring economic rights without immediate delivery.
Risk Consideration: Invest with the expectation of holding indefinitely, understanding the risk of total loss. Only invest amounts that won’t affect your lifestyle if forfeited.
Reg A Offerings: Securities under Regulation A have no federal resale restrictions and can be sold immediately but may be difficult to sell due to volatility. State laws may impact marketability, typically making these long-term investments.
Reg D Securities: Considered "restricted securities," these cannot be freely traded. Resale requires a valid registration or an exemption (e.g., Rule 144), allowing resale under specific conditions, including a holding period of six months to one year, depending on the issuer's reporting status.
Reselling Non-Restricted Securities: Non-affiliated investors must register the transaction or find an exemption for resale, commonly under Section 4(a)(1) of the Securities Act.
Reg S Securities: Also classified as "restricted" in the U.S., with compliance periods lasting up to one year from issuance, during which resale is prohibited.
When you make an investment via Xorro, you’re exchanging capital for a stake in a company or project, governed by an agreement called a “security”. Various registration exemptions exist for such offerings, including Reg CF, Reg A+, Reg D, and Reg S.Investment types on Xorro include:
• Equity Tokens: Receive ownership in exchange for your investment.
• Revenue Share Tokens: Earn a portion of profits without ownership.
• Debt Tokens: Lend capital with the expectation of repayment with interest.
Your potential for returns depends on the success of the projects or companies you’ve funded on Xorro. The risk profile varies by investment, and there are numerous avenues for generating returns.
Where payouts are due they may occur in one lump sum or through recurring payments, depending on the type of payout and the investment agreement.
Xorro charges a 8% fee on total funds raised through typical offerings and collects 2% of the total securities offered in successful financing stages. These fees are deducted from the total capital raised.
For Private Placements, offering of securities are only made through the private placement memorandum and associated offering documents for each offering. These private placement memorandums contain specific details of fees paid to both Xorro and TTC and should be reviewed in detail before investing. No communication by Xorro, TTC, or any of their respective affiliates through this presentation or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice.
For Regulation Crowdfunding Offerings, this Presentation is not a solicitation of money or any other consideration. If any money or other consideration is sent in response it will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and then only through Tritaurian using the Xorro platform. Any indication of interest made by a potential purchaser involves no obligation of commitment of any kind. Certain information contained herein constitutes “forward-looking statements,” which can be identified by future dates or the use of terms such as “may,” “will,” “should,” “could,” “would,” “potential,” “continue,” “expects,” “anticipates,” “projects,” “future,” “targets,” “intends,” “plans,” “believes,” (or the negatives thereof) or other variations thereon or comparable terminology. Forward-looking statements are subject to a number of risks and uncertainties, some of which are beyond the control of TTC. Actual results, dates, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. The forward-looking events discussed in this Presentation may not occur. TTC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained herein is not intended to be relied upon as the basis of an investment decision, and is not, and should not be assumed to be complete.
Certain uses of third-party company names and logos are for illustrative purposes only and do not imply partnership, affiliation, or endorsement. All such intellectual property belongs solely to their owners and not to TTC. None of the information contained herein has been filed with the U.S. Securities and Exchange Commission, except in the event of a Regulation CF or Regulation A+ offering, any securities administrator under any securities laws of any U.S. or non-U.S. jurisdiction or any other U.S. or non-U.S. governmental or self-regulatory authority. No such governmental or self-regulatory authority will pass on the merits of TTC or the adequacy of the information contained herein. Any representation to the contrary is unlawful. By accepting this presentation, each recipient agrees to be bound by the foregoing terms.
Several of the products and services described herein require TTC to obtain various regulatory licenses. TTC is in the process of securing certain licenses in additional to the licenses that it already has. Any product lines will only be launched and offered when full compliance and licensure is achieved. Moreover, the products and services described may not be eligible for users in some states or countries or suitable for all types of users. Prospective users should inform themselves as to the legal and compliance requirements and tax consequences and risks within the countries of their citizenship, residence, domicile and place of business. This presentation does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service by Tritaurian or any other third-party regardless of whether such security, product or service is referenced in this brochure. Furthermore, nothing in this Presentation is intended to provide tax, legal, or investment advice and nothing in this Presentation should be construed as a recommendation to buy, sell, or hold any investment or security or to engage in any investment strategy or transaction. TTC does not represent that the securities, products, or services discussed in this Presentation are suitable for any particular investor. You are solely responsible for determining whether any investment, investment strategy, security, or related transaction is appropriate for you based on your personal investment objectives, financial circumstances, and risk tolerance. You should consult your business advisor, attorney, or tax and accounting advisor regarding your specific business, legal, or tax situation.
